NCUA's Vantage Conversion Denial May Head to Court

The NCUA's contentious denial last week of a federal conversion charter sought by the $654 million Vantage Credit Union of Bridgeton, Mo., could soon head to a federal court, it was disclosed Monday.

The possibility of litigation on the two-year-old community charter case by Vantage regarding its attempt to broaden its bi-state field of membership was raised by Hubert Hoosman, its president/CEO, who charged that the NCUA board made serious and "very troubling errors with broad injury to multiple community charters everywhere."

The federal multiple community charter, he concluded, "is basically dead" based on the NCUA's 2-1 board decision Sept. 16 upholding the Region IV director's denial of the application. According to the NCUA, Vantage as part of its conversion application had requested to include the city of St. Louis and seven additional counties, four in Missouri and three in Illinois.

"But we never had requested the third county in Illinois, we had agreed to walk away from an existing Missouri branch and those facts were not supplied so that makes this whole decision all wrong and on top of that we were never given a chance for rebuttal," Hoosman said.

In an e-mail sent over the weekend to a range of industry leaders both in Missouri and elsewhere, Hoosman charged that he and his chairman "were not allowed to participate in the presentation to the NCUA Board and so we had to just sit there and take it on the chin."

The Vantage decision has drawn wide industry interest for its impact on interstate FOM expansion and, as one Washington lawyer put it, "Vantage unfortunately got caught between two recent rulings on community charters."

"Look, this case is so sensitive we can't even discuss it," quipped one East Coast consultant who tracks NCUA regulation and compliance.

Asked for reaction, John McKechnie, NCUA director of public and congressional Affairs, told Credit Union Times the agency would make no comment and "prefers to let the statements made in the board meeting" stand as its response.

In his e-mailed statement, Hoosman expressed deep disappointment at the ruling. "The future of federal chartered FOM memberships consisting of multiple communities is dead and credit unions just haven't realized it yet," he said. "Unless you are applying for a single county, single municipality or an extremely well defined rural district, you're dead from multiple community federal charter perspective."

"This is a great way to keep our banker friends happy," he added.

Due to the conservative interpretation of the new community charter rules, he went on, "the future of community charters involving multiple communities are almost totally in the hands of state regulators."

"I'm sure there will be exceptions for federal charters," he said. "My greatest fear is after the economy rebounds, progressive credit unions will get frustrated with the new standards, and seriously consider alternative charters as a means of developing a healthy growth strategy to better serve members."